...A CASE STUDY ON CORPORATE RESTRUCTURING IN L&T SUBMITTED BY: GROUP 1 ANSHU KUMARI (60011) ABHIJEET SINHA (60001) AMBUDHEESH PARASAR (60005) ABHISHEK CHOUDHARY (60002) AMRIT RAJ (60006) HIMANI SINGHAL (60016) IN THE COURSE OF COST ACCOUNTING DURING TRIMESTER 2 IN THE ACADEMIC BATCH OF 2013-15, CIMP UNDER THE GUIDANCE OF DR. ASHISH VARMA ACKNOWLEDGMENT The light of a matchstick can never be a match for sunlight. In the similar fashion, it was not possible for our group to complete the project on our own. First of all, we would like to extend our gratitude to DR. Ashish Varma .we were fortunate that he considered us to be good enough to carry on with this project. It was his valuable suggestion, constant help and incessant monitor which helped us in carrying out this project. We would also like to thank our friends and family for their valuable inputs and help. We would be failing in our duty if we ignore the library resource centre of CIMP as it helped us in gathering information which helped us in carrying out this project. 1. INTRODUCTION After the opening up of the Indian economy there had been an advent of large MNC’s and big global corporate houses in India. As a result there had been a constant pressure on Indian corporate houses not only to survive but to come out as a key player in their respective sectors. Many of the Indian firms which followed a rigid organisational structure felt the need to restructure their businesses. Many of the...
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...Use an example of your choice to discuss how ‘corporate restructuring’ transformed market, productive and financial performance. Companies quite often have a need to contract and downsize their operations, or redesign one of the aspects, which might be due to different reasons, such as external factors, increase level of competitiveness or to change company’s direction. All the changes that the company might implement are called corporate restructuring. Usually, corporate restructuring is used when a company’s original structure reached the point when it doesn’t generate the profit, and is no longer efficient. The main aim of a corporate restructuring is to raise company’s profitability and internal operations (Froud 2006). I decided to use Caterpillar example to analyse their need of corporate restructuring and its outcomes. Caterpillar Inc. is a $30 billion global company which is known as a manufacturer of large earth-moving equipment and large construction (Neilson & Pasternack 2005). Caterpillar survived from very difficult times in 1980s, mainly because its product reached maturity level, where customers were no longer interested in it and also the CEO of that company did not take into account very important factor – external environment. In 1980s a lot of companies lost their sales because global recession hit the economy and inflation rates grew very quickly. Therefore, Caterpillar’s structure couldn’t handle the pressure and had to be reorganised. Moreover, Caterpillar...
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...The Effect of Corporate Restructuring on the Shareholders’ Value: The Case of GEC/Marconi Magdy Abdel-Kader 1 * and Vagia Mentzeniot 2 1 Brunel Business School. Brunel University. Uxbridge. Middlesex UB8 3PH. UK * Corresponding author: Tel: +44 (0)1895 266739. Fax: +44 (0)1895 269775. Email: magdy.kader@brunel.ac.uk 2 Finance Division, Piraeus Bank Group, Headquarters, Stadiou & Amerikis 4, Athens, 10557, Greece Abstract GEC/Marconi’s transformation from a diversified conglomerate to a focused telecommunications and information technology company was an eventful and rambling transmission that resulted in the deterioration of shareholders’ value. It represents one of the most dramatic falls from grace in British corporate history and one of the greatest corporate governance fiascos of all time. The study investigates the wealth effects of Marconi’s sell-offs and acquisitions on its shareholders’ value by calculating the abnormal returns on the announcement days of all the disposals/acquisition during 1996-2002. The results support the view that shareholders’ value increases when a company proceeds to corporate sell-offs to pursue a focus strategy. However, the authors conjecture that GEC/Marconi has destroyed shareholders’ value through these disposals/acquisitions because of several mistakes, such as being prone to heavy debt. © 2007 World Research Organization. All rights reserved Keywords: Marconi, GEC, Restructuring, Disposals, Acquisitions, Divestiture Citation:...
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...Corporate Crisis and Restructuring of ArcelorMittal About ArcelorMittal ArcelorMittal is a multinational steel manufacturing corporation headquartered in Avenue,Luxembourg.It was formed in 2006 from the takeover and merger of Arcelor by Mittal Steel.ArcelorMittal is the world's largest steel producer,with an annual crude steel production of 97.2 million tones as of 2011.It is ranked 70th in the 2012 Fortune Global 500 ranking of the world's biggest corporations. ArcelorMittal was created by the takeover of Western European steel maker Arcelor by India-based multinational steel maker Mittal Steel in 2006, at a cost of €40.37 per share, approximately $33 billion total.Mittal Steel launched a hostile takeover bid which replaced a previous planned merged between Arcelor and Severstal, which had lacked sufficient shareholder approval. The resulting merged business was named ArcelorMittal and headquartered in Luxembourg.The resulting firm produced approximately 10% of the world's steel, and was by far the world's largest steel company.Total revenues in 2007 were $105 billion.In October 2008, the market capitalization of ArcelorMittal was over $30 billion. On 30 June 2010, the European Commission fined 17 steel producers a total of €518 million for running a price-fixing cartel, with ArcelorMittal being fined over €270 million.In 2012 the company had $22 billion of debt.As of 2012, due to overcapacity and reduced demand in Europe it had idled 9 of 25 blast furnaces.In October...
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...focusing on restructuring and how it relates to cost improvement. This information has been investigated in order to gain a good knowledge on the importance of restructuring. In order to test this theory, I used random sampling of 20 different data reports relate to the issues that the company faces concerning expenditures, labor and necessary spending. Each month every section of the company has a major meeting and part of the meeting is to discuss the financial reports of the company. Many companies may not find this to be important but it is necessary for our company to do this to track spending. Companies typically do not discuss financials with everyone but they do with us because everyone is given a credit card and a budget for their particular section. We are able to access the other part of company’s financial documents if we want to use them as a tool to improve our budgets. What prompted me to do this is I started working for the company in the year of 2011. After working 5 months for the company, the employees received a letter stating that there will be pay cuts due to the government cutting funding for the program that we are in. There were many complaints from employees who have been there for many years. The employees complained stating that they were told the last pay cut they received would be the final pay cut. I was able to speak to some people in the office and found that they didn’t receive any pay cuts. The company should make the necessary restructuring if they...
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...Organizational Downsizing Techniques and Handling Layoffs Team 1 Christina Berardi Bridget Quinn-Carey Tung-Yueh, Lee Over the last two decades, organizational downsizing has been a key management strategy favored by many organizations attempting to cope with fundamental and structural changes in the shifting economy. In the mid-1980’s, downsizing was implemented primarily by companies experiencing difficult economic times (Gandolfi, 2006). Companies hoped to cut costs and improve performance. By the late-1980’s, it developed into a proactive restructuring strategy for a multitude of organizations. Furthermore, since then, organizational downsizing has now transformed the corporate landscape and changed the lives of hundreds of millions of individuals around the world (Gandolfi, 2006). There are several definitions that have been developed to effectively define the phenomenon of organizational downsizing. To sum it up in one sentence, organizational downsizing refers to a set of activities, taken on by the core management of an organization, designed to improve organizational efficiency, productivity, and competitiveness. It represents a management strategy that affects three components: (a) the size of the firm’s workforce, (b) the costs, and (c) the work processes. On the surface, downsizing can be interpreted as merely a reduction in organizational size, and the process is a chaotic and uncertain experience...
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... Chairman, HDFC, (India Today, February, 2003). The unfolding of a crisis After proposing the Strategic Plan in 1991, Ratan Tata observed: “I think we are in many more businesses than we should have been in and were perhaps not concerned about our market position in each of those businesses. I think the needs today are that we define our businesses much more articulately and that we remain focused rather than diffused, and that we become more aggressive than we used to be, much more market driven, much more concerned about our customer satisfaction (HBS Working Paper, 9-798-037).” Ratan Tata on being questioned in an interview regarding – what criteria he will choose in deciding what to keep and what not to, in his groups’ portfolio restructuring exercise? To this he replied, “One is certainly going to be: can we be in the first three in that industry in the country? Secondly, are we willing to continue to put money and managerial resources into that industry to have it continue to be that way? The third is the most serious one, as to whether that particular firm will provide us with the returns that we are expecting (Business World, September, 1999).” Strong resentment followed with the business heads, the all powerful satraps. As...
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...How To Make Restructuring Work for Your Company Published: | October 1, 2001 | Author: | Stuart C. Gilson | Executive Summary: A bungled corporate restructuring can turn a good idea into disaster. In an excerpt from his new book, HBS professor Stuart Gilson outlines the keys for a successful corporate makeover. Plus: Gilson Q&A. About Faculty in this Article: Stuart Gilson is the Steven R. Fenster Professor of Business Administration at Harvard Business School. * More Working Knowledge from Stuart C. Gilson * Stuart C. Gilson - Faculty Research Page Editor's Note: The following excerpt is taken from the "Lessons of Restructuring" section of Gilson's introduction to Creating Value through Corporate Restructuring. Although the case studies in this book span a wide range of companies, industries, and contexts, some common issues and themes emerge. Taken together, they suggest there are three critical hurdles or challenges that management faces in any restructuring program: 1. Design. What type of restructuring is appropriate for dealing with the specific challenge, problem, or opportunity that the company faces? 2. Execution. How should the restructuring process be managed and the many barriers to restructuring overcome so that as much value is created as possible? 3. Marketing. How should the restructuring be explained and portrayed to investors so that value created inside the company is fully credited to its stock price? Failure to address any one of...
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...Restructuring is the corporate management term for the act of reorganizing the legal, ownership, operational, or other structures of a company for the purpose of making it more profitable, or better organized for its present needs. Other reasons for restructuring include a change of ownership or ownership structure, demerger, or a response to a crisis or major change in the business such as bankruptcy, repositioning, or buyout. Restructuring may also be described as corporate restructuring, debt restructuring and financial restructuring. Executives involved in restructuring often hire financial and legal advisors to assist in the transaction details and negotiation. It may also be done by a new CEO hired specifically to make the difficult and controversial decisions required to save or reposition the company. It generally involves financing debt, selling portions of the company to investors, and reorganizing or reducing operations. The basic nature of restructuring is a zero-sum game. Strategic restructuring reduces financial losses, simultaneously reducing tensions between debt and equity holders to facilitate a prompt resolution of a distressed situation. Corporate debt restructuring is the reorganization of companies’ outstanding liabilities. It is generally a mechanism used by companies which are facing difficulties in repaying their debts. In the process of restructuring, the credit obligations are spread out over longer duration with smaller payments. This allows...
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...Paper for MGMT 541 – Organizational Behavior Objective: Develop an improved knowledge of Organizational Behavior Theory and an improved ability to relate Theory to an Organizational Situation. This improved knowledge and improved ability should emphasize a solutions oriented approach. Assignment: 1. Write an 8 page paper which identifies an Organizational Behavior Theory. Provide a brief explanation of the theory. 2. Identify a situation in an organization to which this Theory can be applied. Find an article in business related publication (e.g. Wall Street Journal, Harvard Business Review, business section of New York Times or Chicago Tribune, etc) to which you can apply the theory. For example, the article might describe an action the organization is taking such as an acquisition, divestiture, employee layoff, market expansion/contraction, etc.). 3. Describe how the theory helps to identify what actions the organization should take to achieve the best outcome(s). Did the organization take these expected actions? Why or why not? 4. If the article did not contain the actions the organization should take with employees, suggest what these actions should be and why. 5. Your paper is to contain at least 4 professional references which support your statements. Identify these references both in the body of the paper and at the end. The text and any readings in the Discussion Board cannot be used as one of the 4 professional references. 6. Your...
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...IMPLICATIONS OF CORPORATE RESTRUCTURING Dr. Bernadette D’silva Director, K.G. Mittal Institute of Management, I.T & Research, Malad (West), Mumbai64, Email: Bernadette.dsilva@gmail.com Mrs. Annie Beena Joseph Associate Professor, K.G. Mittal Institute of Management, I.T & Research, Malad (West), Mumbai-64, Email: annie.b.joseph@gmail.com ABSTRACT Corporate Restructuring has become a major component in the financial and economic environment all over the world. It is the process of redesigning one or more aspects of a company. The process of reorganizing a company may be implemented due to a number of different factors, like positioning the company to be more competitive, survive a currently adverse economic climate, or poise the corporation to move in an entirely new direction and many more. Corporate restructuring is needed to counter challenges in competitive business environment. Most of the organizations carry out corporate restructuring as per the needs of the business. Some do it through mergers, acquisitions, and some by demergers as well; while some others make structural changes and carry out resource optimization in the organization. This paper analyses the success rate of corporate restructuring program (CRP) in India. It also tries to understand the implication of corporate restructuring program with the help of a case study. The present paper is mainly based on secondary data. The paper makes use of SPSS 16 and MS-excel for data Analysis Keywords: Corporate Restructuring, Challenges...
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...TITLE OF THESIS: THE IMPACT OF CORPORATE AMERICA DOWNSIZING FOR BANKS ON CORPORATE ETHICAL STRATEGY THESIS STATEMENT The thesis statement of this research paper is “The impact of corporate America downsizing for banks on corporate ethical strategy”. The paper shall cover issues such as the causes of downsizing, how to go about the downsizing process, impacts of downsizing and measures that can be put in place to curb such adverse impacts to the downsized and those employees left behind at large and ethical issues that relate to downsizing. INTRODUCTION Downsizing is the process whereby companies reduce the number of employees for a short while or for an unknown period of time. Companies downsize due to radical changes in the external and internal environment of the organization such as restructuring of the organization, poor performance of businesses and business processes reengineering .Globalization and collapsing of trade barriers within nations and the cropping up of technology and computerization has compelled companies to downsize. Several steps are necessary for successful downsizing: education, fortifying of the organizations goals and values, trustworthiness and pride every time, designing, and communication. Other vital points to note when conducting downsizing, including putting in place a clear vision and goals, achieving the transition successfully, planning, joint effort, concern and skills. Downsizing has shown to cause family breakup, lowering of self-esteem...
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...Bankruptcy filing of Kodak Whenever a big corporation files for bankruptcy, many investors question the move. After the recession, many big corporations like Lehman Brothers etc filed Chapter 11. A chapter 11 case starts when the company voluntarily files for a petition in bankruptcy court. When the company has many outstanding, it prefers to file for the case. It was no big surprise when Eastman Kodak, 131 year old company that was founded by George Eastman filed for bankruptcy protection in 2012 under chapter 11 of US bankruptcy code in Southern District of New York. It was pioneer in introducing first automatic snapshot camera. It was the first company that provided the individuals a solution for taking their own photographs and not depends on professionals. The term ‘Kodak Moment’ became synonymous with taking pictures of precious moments and having pictures of life time of memories. Reasons for Bankruptcy An attempt is made to understand what lead to the financial distress in the company. The top management of Kodak could never innovate. Though they were pioneers in launching the concept of self photography, many competitors developed better products and took the market share from the company. The company thought that its customers would remain loyal to it but when new products and new technology was offered in the market, it lost its market. The company did not pay attention to the improvement in the technology. When digital cameras came into existence, Kodak did...
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...Corporate Debt Restructuring in India Despite of best intentions and efforts, corporate find themselves in financial difficulty because of factors beyond their control or due to internal reasons. The trigger for difficulty might be an unstable macro-economic environment or changes in government policy or regulation or due to an incorrect strategic decision or problems within the company. If a company goes down, it takes an entire ecosystem of creditors, distributors, employees, customers, etc down with it. So at times, for the revival of corporate and for the safety of the money lent by banks and FIs, timely support through restructuring in genuine cases is called for. However, delay in agreement amongst different lending institutions often comes in the way of such endeavours. Based on the experience in countries like the UK, Thailand, Korea, Malaysia, etc. of putting in place an institutional mechanism for restructuring of corporate debt and need for a similar mechanism in India, a Corporate Debt Restructuring System was evolved and detailed guidelines were issued by Reserve bank of India on August 23, 2001 for implementation by financial institutions and banks. CDR is a non-statutory mechanism which is a voluntary system based on Debtor-Creditor Agreement (DCA) and Inter-Creditor Agreement (ICA). The accounts where recovery suits have been filed by the creditors against the company, may be eligible for consideration under the CDR system provided, there is approval by at least...
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... Downsizing refers to the permanent reduction of a company's workforce and is generally associated with corporate reorganization, or creating a "leaner, meaner" company. Downsizings such as these are also commonly called reorganizing, reengineering, restructuring, or rightsizing. Regardless of the label applied, however, downsizing essentially refers to layoffs that may or may not be accompanied by systematic restructuring programs, such as staff reductions, departmental consolidations, plant or office closings, or other forms of reducing payroll expenses. In essence, restructuring efforts attempt to increase the amount of work output relative to the amount of work input. Downsizings such as these are also commonly called reorganizing, reengineering, restructuring, or rightsizing. Regardless of the label applied, however, downsizing essentially refers to layoffs that may or may not be accompanied by systematic restructuring programs, such as staff...
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